PaperlinX announces UK closures amidst ongoing restructuring
By Pamela Mardle Friday, 29 June 2012
Paperlinx has announced its intention to restructure its UK trade following sales of its American and Italian businesses.
The proposals will include the potential closure of some UK sales offices and Delivery Co logistics business, which will be funded by the US$38m (£24.4m) and €13m (£10.5m) gained from its exited American and Italian businesses respectively and the AUD$39m (£25.5m) gained from the close-out of the foreign exchange option.
It is proposed that Howard Smith Paper's Hawley branch will move to a central London location and its Sowerby Bridge sales office will relocate to Leicester. The PaperCo contact centre, housed in the Leicester building, will also close and business will transfer to regional PaperCo branches.
PaperCo’s North West Paper Preston business will move to Manchester, and the Rothera & Brereton unit to Stourton in Leeds.
These moves are aligned to ongoing improvements within Delivery Co, which will see Preston logistics moving to Manchester and the Leeds Armley Road facility join the Rothera & Brereton business at Stourton to operate under a common logistics system.
It is expected that 30 employees have entered consultation, which will last over the summer period, regarding the impact that the restructure will have on their jobs.
Paperlinx executive vice president David Allen said: "Staff will not necessarily leave the company under the proposal, although inevitably it will have an impact. They are relatively small moves to nearby locations and we anticipate that less than 2% of our workforce will be affected by the changes."
Allen pointed out that only two of its 30 UK Delivery Co businesses were being affected but added that changes were being made in relation to the weakening of demand for paper.
He said: "We are seeing an ongoing slow decline in our core business as a result of the continued uncertainty in the global paper markets."
We are already having success within our diversified areas and see there are opportunities to grow significantly in the sign and display and packaging markets and this restructure will enable us to accelerate our expansion into these profitable areas."
Paperlinx is currently recruiting within its packaging businesses to increase its presence in the market, adding at least seven new staff to its packaging arm across the UK.
The company has also restructured part of the group's financing with regards to intercompany loans between its Australian and UK subsidiaries. This, combined with the sale of both its Italian and US businesses to raise cash, has ensured a solid financial base on which to plan the company’s future growth, according to Allen.
The corporate business expects to make a loss of A$38m in continuing operations before restructuring costs and a toal of A$171m after tax this year following the business sales. The Italian business, Polyedra, has been sold to coated paper manufacturer Lecta and the two American divisions, Spicers USA and Kelly Paper, have been bought by Central National-Gottesman Inc in New York.
Allen said: "In the UK, we continue to trade profitably and this restructure would enhance that for a promising future.
Cash gained directly from the sales would be injected into the UK, European and Australian Paperlinx business, according to Allen.
He added: "We are still committed market leaders who have a 50% share in the commercial print industry and these changes will ensure that we have a solid financial base on which to plan our future growth."
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